Facebook has begun building a data center in Lulea, Sweden, where it will benefit from cheap electricity and year-round free air cooling, the company announced Thursday.

The data center will be Facebook's first in Europe, and its third worldwide. The company expects to begin fitting out the first server hall by the end of next year, and will begin serving the first Facebook users from it in April or May 2013. Three other server halls in the same 28,000 square-meter building will be ready for fit-out by 2014. The site has room for two other buildings of the same size, but Facebook has no plans to begin constructing them yet, said Tom Furlong, the company's director of site operations.

Lulea is on the edge of the Arctic Circle, and has a mean annual temperature of around 1 C, with average summer highs of around 20 C, allowing Facebook to save money by cooling its data center with fresh air rather than air conditioning.

About two-thirds of the floor area will house servers, the rest being reserved for support functions such as an evaporative cooling system for use during particularly warm spells, Furlong said. This can also be used to humidify the air during dry weather, to reduce static electricity risks, he said.

Using free air cooling will help Facebook increase a key measure of data center efficiency, its PUE (power usage effectiveness). PUE is calculated as the total power consumption of the data center, including cooling and lighting systems, divided by the power consumption of IT systems. The less power wasted on ancillary functions such as cooling and lighting, the more energy-efficient the data center becomes.

Average PUEs for major data centers typically lie between 1.6 and 1.99, according to a survey published by the Uptime Institute in May. Capgemini said last December that its Merlin data center in the U.K. had a factory-tested PUE of 1.1.

The servers there will run primarily on hydroelectric power from the nearby Lule river, Facebook said. Lulea has the cheapest electricity in Europe, according to the city's business development agency.

"This not the first data center in Lulea, but it is the biggest," said Matz Engman, CEO of the agency. Sweden's customs authority already has three smaller data centers in the city to track imports and exports, he said.

Lulea is now hoping to make a name for itself as a cool place to build a network node. With two neighboring cities, it is branding itself as the "Node Pole," Engman said.

Before selecting Sweden to host its first European data center, Facebook considered a number of other countries. Forty sites were considered, and the company visited a shortlist of eight. In addition to Lulea, one other site met all Facebook's criteria, said Furlong.

Facebook has developed its own power-efficient servers and power supplies for data centers, publishing technical specifications and CAD files for them through the Open Compute Project. That organization will hold a summit in New York later Thursday.

In particular, Facebook uses a highly efficient electricity system with battery backup close to each rack, said Furlong.